Use the Following to Answer Questions

question 280

Multiple Choice

Use the following to answer questions:
Suppose that the interest rate in Canada is 4%,in Japan it is 7%,and financial assets in the two countries are equal in risk.
-(Scenario: Japan and Canada) Refer to Scenario: Japan and Canada.The implication is that:

• A) interest rates in Japan will increase.
• B) interest rates in Canada will decrease.
• C) the capital flow between Japan and Canada eventually will render the interest rates equal.
• D) the interest rates in both countries will remain unchanged.

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Definitions:

Vertical Merger

The combination of two or more companies that operate at different levels within the same supply chain or industry.

Consolidation

The joining of two or more organizations to form a new organization.

Economy-of-Scope

Economic efficiencies derived from variety, rather than volume, where producing a wider range of products can lead to lower average costs.

Economies of Scale

The cost advantage achieved when production becomes efficient, as the scale of the operation grows and the cost per unit of output decreases.